UK games industry must adapt or die

Independent games developers and publishers in the UK must adapt or die as the market gets ever more cut-throat.

According to research from accountants Grant Thornton there are three key issues facing the industry: protecting intellectual property, finding alternative sources of funding and moving to more professional and consistent approach to accounting.

Rob Rowe, head of Grant Thornton’s computer gaming industry group, said the UK gaming was a growing industry with UK developers responsible for 15 per cent of all games sold worldwide. But he warned the industry that increasing consolidation means UK firms must be flexible to survive.

Also developers must guard their intellectual property from publishers and pirates,and sshould try hard to retain rights to ensure future revenues, he advised. Rowe welcomed use of technology like Steam which protected the release of Half-Life 2.

Despite the UK market turning over some £2bn a year it lacks a strong multinational player - with the exception of troubled Eidos.

Rowe said:”UK games publishers face problems of a David and Goliath nature, with US company Electronic Arts way ahead of its nearest rivals.”

He believes a move away from the traditional publisher-funded development process would give UK developers more independence.

Another factor restricting growth is a lack of understanding of the industry by the financial services community. Rowe blames “hobbyist management” for this communication gap. The industry needs to take a more consistent approach to accounts to reassure investors.

Grant Thornton looked at financial statements from the ten largest UK independent publishers, ten of the largest UK developers and five of the largest publishers in the US and two in France. ®